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10 things to avoid when looking for partners
Starting a business partnership is an exciting venture – it’s exhilarating and promising like nothing else. But what happens when the good vibes fade and
reality sets in? If you’re like many hopeful business owners, without proper planning and execution you may find yourself with a not-so-ideal partner who
ends up hurting your company instead of launching it to the stars.
Here are 10 things to avoid when you’re looking for the ideal business partner.
1. Not Doing Your Research
Just as not knowing the market well enough will inevitably cause a startup to fail, not putting in the
time to see what your company needs will not help you find business partners. You must do whatever it takes to be able to accurately view the strengths and
weaknesses of your company and find someone who can rise to the challenge.
Business Know-How guru Karin Schaff recommends talking to coworkers and management in
your company to see the kinds of needs you and a partner should be fulfilling. Don’t leave any department overlooked – everyone from finance to marketing
has valuable input to contribute.
Schaff drives home her point with this solid advice: “Don’t determine what or who will make a good partner in a vacuum. Partner relationships need
corporate-wide support to make them work.” You have to find someone who will play well with your team.
2. Not Having Clearly-Defined Roles
While having a business partner in essence means dividing the responsibility of business ownership, splitting that ownership 50/50 may not be the best
If control of a partnership is split exactly down the middle, many times tough decisions are made even harder because there isn’t a clear leader between
partners. Entrepreneur Brad Sugars suggests splitting the balance 60/40 or 70/30. This will enable
decisions to be made more quickly and efficiently, and then “you and the business have a point person for accountability and overall operational control.”
Even if control of the company is weighted more towards one partner, not assigning clear roles can have extremely counterproductive results.
Writer Anne Field notes that not
having these distinct roles can erode trust in the long-term, simply because communication between partners is assumed rather than clearly communicated.
3. Not Having a Money Plan
Having a money plan is essential. Business trainer Bill Painter outlines several questions to help you succeed with your money plans.
How will the profits be divided? How will each of you be compensated for your contributions? How much money will each of you put into the business?
You must have answers to questions like these before rushing into a business partnership. Figuring out the answers as you go is a sure way to a partnership
4. Not Having Similar Long-Term Goals
In the beginning, short-term goals may drive your company. But the glory of shared success can sometimes blind business partners to their long-term needs,
and you must have an agreed-upon master plan in place for the long haul.
Differences in goals can be subtle, like what niche the partner would like to tap into, or more extreme, like the vision for your company. If you want to
turn your company into a local powerhouse that will bring you wealth and prosperity but your partner only wants a 9-5 job, chances are your business will
suffer because of these mismatched long-term goals.
Field suggests mapping out long-term goals early and often in a partnership so that you will always know where your partner stands.
5. Not Sharing the Same Vision
This is similar to not sharing long-term goals, but it’s even more crucial to the success of your business. Sharing the same vision means having the same
idea about the overall direction of your company.
Rather than being defined in particular goals, sharing a vision means both you and your partner want your business meet a certain need. If one of you wants
to make mortar and the other wants to build roofs, your vision is different even if they both pertain to construction.
Jennifer Utz, Vice President of Buzz Marketing at Marriott International, suggests one of
the most important things you and your business partner can share is similar values. You may disagree on how money is spent and how to solve particular
issues facing your business, but the manner in which you conduct yourselves and the purpose of your business aims must coincide for success.
6. Not Defining an Exit Strategy
It may sound crazy to think of a way out of your partnership before it even begins, but that is exactly what you should do as a savvy businessperson.
Having disagreements with your business partner is inevitable, and if during these disagreements you find that your visions are no longer the same, you had
better have an exit strategy.
uses the marriage analogy of prenuptials to suggest that you should calculate what exactly each partner has brought to the table and what each partner
would be leaving with should the partnership fail. Simply put, you and your business partner are forming a special relationship, and if broken, a backup
plan is in order.
If an exit strategy still feels like you’re expecting failure, consider the advice of legal
writer Stephen Fumari, who perhaps frames it best: “Consider it staying prepared for your next opportunity.” You should always protect your assets with a
7. Not Putting Everything in Writing
You’ve heard the saying before: if it isn’t in writing, it doesn’t exist. Draw up the terms of your business, your goals, and each partner’s responsibility
to the company. Not putting your business plans in writing only opens the door for later discrepancies and arguments. If you have a clear-cut plan written
down, no amount of finagling will be able to change what is already set in stone.
A pitfall with this idea is assuming too much. You must put everything in writing, no matter how trivial it may seem at the time. You may assume you and
your partner will want to have weekly progress meetings, but ten years later in different circumstances, a binding contract may be all that’s keeping you
and your partner from communicating every 30 days.
“Give the document to a disinterested party to find poorly-defined terms,” suggests business expert Matt Bodnar. This will add an unbiased
perspective and help you identify what you’ve forgotten to spell out explicitly on paper.
8. Finding a Partner Instead of Hiring an Employee
No matter how tough times are for your business, never make a partnership with someone whom you should simply hire instead. While it may seem like a good
tradeoff in the beginning, with your “partner” working essentially for free until profits arrive, sharing that much power with someone you lowered the bar
to partner with can only end in disaster.
For several of the reasons shared above, partnering instead of hiring will cause you to lose in the long run. Chances are high that this partner does not
share the same long-term goals as you do, and if you only need someone to fill in the gaps you’re too busy to fill, you need to fork over the money to pay
that person as an employee instead of as a partner in your lifelong pursuits.
Sugars puts it simply: “Don’t give away what you don’t have to.”
9. Not Protecting Intellectual Property
In your partnership, if one of you has the brilliant idea and the other one drives the business, you must protect your intellectual property from outside
competition and from a potential failed partnership.
Entrepreneur recommends nondisclosure agreements be a key part of your business partnership. This will ensure that everyone’s intellectual property is
protected, and can be legally enforced. Their business partner article quips, “If you can't talk
about it, you shouldn't be doing it. A contract documents the trust that is already in place and ensures everyone abides by it.”
This may go a long way toward protecting you and your partner’s friendship, as well.
10. A Lack of Diversity
Having a like-minded partner is essential for success, but if you and your partner think exactly the same way about everything, you aren’t tapping into the
potential you could be by adding some fresh perspective. Seeking business partner qualities that complement your own will help grow your business
Accountant writer Mayeer Pearl suggests, “It might be more
strategic to partner with someone who has different skills and interests; someone who can fill the gaps where you are perhaps lacking.” This can only
provide a more well-rounded leadership experience for your employees.
Writers Rodd Wagner and Gale Muller weigh in on
, saying, “Sometimes what's required is the difference in how the two of you think or act. One consistently sees the potential; the other routinely sees
the risks. One generates ideas; the other puts them into production. One is good with technology; the other is good with people.”
The challenge is to strike a balance between complementary skills and a lack of teamwork. You and your partner must still have enough in common to drive
your company forward fluidly and creatively.
What other advice did you find helpful when searching for a business partner? Let us know in the comments below:
Images: Pixabay, Pixabay
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